As the leading foodservice agency we make it our business to stay abreast of the latest trends and developments in the eating out market. To that end we always make sure we attend the MCA forum debriefs to get the latest market insight. This week we joined the great and the good of the world of operators and manufacturers to hear the latest news on market dynamics, menu trends and consumer demand in the eating out market. As ever there was a huge amount of great information, but here are our top ten take outs…
1. The wider economic picture – GDP saw 1.8% growth last year, unemployment is at an all-time low at 4.7% and the Coffer Peach index was up 1.7% LfL in Feb, so overall the economy is in good shape. However, consumer confidence is still negative and retail sales dropped 1.4% from Jan to March.
2. The eating out market – Consumers have the money, with disposable income currently running at £202 per week (with growth slowing as inflation bites) but since the referendum they don’t feel confident to spend it. As a result participation rates are showing a slight decrease at 92.4%, but it is frequency that has been hardest hit with all meal parts affected. Versus 2016 Q1 snacking is -9%, lunch -6%, dinner -8% and breakfast is -6%. Conversely, as menu price inflation hits, spend it up with dinner +5%, lunch +2%, breakfast +4% (hitting £5) and snacking +7% (hitting £4). MCA still predict that the eating out market will grow in 2017 but at a slow rate.
3. Menu trends – Data from MCA’s new Menu Tracker show the number of products on menus is broadly static. But many have far more than the recommended optimum of seven offerings per meal part. Chicken and beef dominate, but seafood and vegetarian are making ground with vegetarian dishes up an impressive 6.6%. Sides and desserts are where most new lines have been added, with Carluccios topping the chart for the number of new items. Grilled is up and fried is down, in line with the growing health trend, along with more brands using up-selling sparingly on menus.
4. Menu price inflation – Menu price inflation is c3% with chain restaurants increasing median prices by 2.8%, managed pubs by 1.8% and fast food brands by 3.5% and a third of brands have increased prices for the same dish post-Brexit. Managed pubs are recovering margin predominately from starters (up 5.4%) and side dishes (up a substantial 11.3%). Pubs are adding premium lines line steak to increase exit prices with 10 out of 11 pub exit prices increasing or remaining the same, whilst 17 out of 22 chain restaurant’s exit process increased or stayed the same. Currently the average spend for two people in a chain restaurant (excluding drinks and including three courses) is c£48.
5. Menu pricing danger – With consumer confidence low and menu prices rising, it could cost a party of five an additional £7 to eat out based on the these findings, this, along with the increase in exit prices means there is the danger of ‘bill shock’. So menu engineering to smaller portions to cap prices and other tactics to ensure operator’s existing customer base isn’t alienated are key. Therefore, menu management with regional pricing, as well as value engineering will become crucial to future success in order to manage margin, as in costs rise, especially with menu price increases expected to continue based on MCA’s industry decision maker survey.
6. Clever menus – Value engineering around smaller portions for a higher price point, up-selling, design changes to move focus away from prices, enticing descriptors and of course regional pricing can all help to manage margins. As far as the North South divide, it will come as no surprise that Londoners are less price sensitive and thus menu prices in London are higher, with prices 7% higher in London vs. the Midlands.
7. Look closely at your menu – Do the prices end in 9,5 or 0? (i.e. £5.99, £5.95 or just £5) This can tell you a lot about the establishment, as 9 is the preferred option for the regions and the value and fast food end of the market, while mainstream tends to opt for 5, with rounded up prices usually found on the more quality establishments where they are confident of their product and don’t feel their customers will be hugely price sensitive. Descriptors are also a key tool, helping operators tap into key trends, add provenance and authenticity to their menus and thereby justify higher price points. Fresh, baby, free, light and home – as in, fresh green salad, baby aubergine, free-from, light option, home-cooked, can be found on a wide variety of menus and help operators tap into the healthy eating trend. Whilst the words associated with higher prices include – recommended, delicately, aged, Scottish, distinctive, slow, tender, favourite, share, wild, VIP and juicy. So take note operators, it’s time to get your copywriting hats on (or get a good agency on the case!).
8. Consumer behaviour – Looking at the MCA eating out consumer panel it is interesting to see that beef has overtaken chicken as top protein group, with 25.9% share vs. 23.8% showing a 1.3% growth vs. Q1 2016. Although chicken and beef still dominate menus, with chicken remaining no. 1 in chain and fast food restaurants. The beef burger has replaced curry as the top dinner dish, driven by consumption in the 35-49 and 50+ age groups. Whilst curry is the top chicken dish, it has declined in popularity as consumers move to chicken burgers. Over all we are eating fewer courses with the average number of courses down 2% from an average of 1.62 to 1.58, driven by fewer starter/main and three-course combinations. Alcohol is more popular than soft drinks when it comes to dinner (no surprises there) with craft beers, flavoured ciders, low sugar, cocktails and gin coming out on top.
9. Industry perception of trends & issues – Healthier eating, food to go, cost cutting, flexitarians, allergy-free, indulgence and vegetarian are all on the radar for industry decision makers. With the top fastest growing cuisine influences over the next 3-5 years predicted to be, counting down from one to five, healthier eating, BBQ, premium chicken, vegetarian and street food (knocking premium burgers and Vietnamese out of the top five compared to last year’s survey). Healthier eating is certainly top of mind, as the number one current trend affecting food menus, closely followed by gluten-free, other allergy items and the influence of street food and flexitarianism. As far as how healthier eating is being incorporated into menus, top is adding more gluten-free menu options (39%), followed by less sugar (30%), less salt (26%) and a greater choice of healthier foods (26%).
10. Food trends – MCA have identified convenience, foodie culture and eating out technology as new mega trends, joining the established list of healthier eating, indulgence, informality, provenance & sustainability and value scrutiny. Demand for authenticity is now also an established trend around the country, as consumers demand authentic foods from around the world and become more educated and adventurous when it comes to world cuisines. Major cuisine influences are coming from Asia, the Americas and pockets of Europe, specifically Eat Asian, Korean, Taiwanese, Contemporary South Asian, as well as BBQ, North American, Mexican and South American. Whilst Nordic/Scandinavian, North African, Greek & Eastern Mediterranean cuisines are also highlighted as growth areas. When it comes to product trends Poke and seaweed are up there. Asian food is making a splash with high profile openings including Ugly Dumpling and Din Tai Fung. Whilst American-Italian, fish and chips and greasy spoons are feeling the pinch along with all you can eat buffets. Premium tequila and craft beer are trending following on from gin and craft IPS’s as far as drink trends. But with younger consumers drinking less, cortado coffee, premium lemonade and green juices are also set to be key trends this year.
As ever the debrief was hugely informative and highlighted how dynamic our industry is. With so much going on in the market there are lots of opportunities for brands and at Jellybean we use these crucial insights to help build strong and strategic campaigns for our clients, helping them make the most of current trends and moves in the market. A big thank you to the team at MCA for another great event. To find out more about MCA Insight and how you can get the full report visit the MCA website here.